Managers need an effective tool kit with questions they can routinely ask

Published in the August 18, 2006 edition of Columbus Business First

As a manager moves up in an organization, the job becomes less focused on daily operations and more focused on strategic direction, effective execution and integration across all units of the organization.

This removal from the familiar operational role of previous jobs makes it essential that a manager develop tools to evaluate risk, identify weak points and usefully support key initiatives without micromanaging. At the top of an organization, asking the right questions becomes the dominant tool to manage effectively.

This is not limited to nonprofit management. A sizable portion of our reader feedback has come from managers in for-profit organizations, who find many of the questions that concern nonprofit managers concern them as well.

In response to reader requests over the past year, we have redesigned www.proctorconsulting.org to provide an initial tool kit of questions every manager should be routinely asking. Here is a sample of questions that should be in six major areas of your tool kit.

Questions to ask in developing a strategic plan and budget.

When developing your budget and reviewing your multi-year financial plan, you should actively review your mission, priorities and management and financial capacities. If you are considering an expansion in program, facilities or staff, begin by asking:

• How would we change our operations to handle this expansion? Who on our staff would be affected and what is their view?

• If we hope to receive additional outside funding, have we discussed our expansion with potential donors or investors and have they assured us of additional support for the foreseeable future?

Questions to ask to achieve an engaged and effective board.

A board that governs well is an asset. The board should regularly ask these questions to assure it is engaging all board members to fulfill their duties effectively:

• Do you see board members who say nothing during a meeting?

• Do you ensure that each member’s opinions are known and that each member has a sufficient understanding of the issue at hand and its importance to the organization?

Questions to ask to improve your financial management.

One of the most difficult challenges in financial management is to focus on sufficient detail to be thorough and strategic without being drawn into insignificant and distracting detail. Regularly ask:

• Can we convincingly prove that our spending reflects our priorities?

• What events might force us to deviate from delivering on our priorities this year and next?

Questions to ask when you become aware of a crisis.

A major financial crisis can emerge from a revenue forecast that was off the mark, a grant or contract that was not renewed, a significant tax assessment or perhaps embezzlement. Start with these questions to help you to respond quickly and constructively to a financial crisis:

• Since it is prudent to expect to encounter more problems, have you established a process that will allow the staff and board to spot new and emerging problems as quickly as possible?

• Have you instituted changes in reporting and governance so that your ability to anticipate problems and respond in the early stages will be stronger next time?

Questions an audit committee should ask.

The audit committee is where the rubber meets the road for accountability, accuracy and reliability of financial and management information. The audit committee should develop a portfolio of questions that it routinely asks over the course of every year.

• How much cash are we supposed to have on hand? What is our action plan if cash falls below that level?

• Is there anything now or in the next year that would lead the auditor to have serious concerns about the health or viability of the organization?

Questions to ask in planning a campaign.

As part of any feasibility study for a major campaign, or even for annual fundraising planning, it is timely to verify that the multi-year financial plan for your organization remains valid and relevant. Start by asking these questions to be sure of the financial context that your fundraising plan must complement:

• Is service demand likely to grow in future years? Will current grant and philanthropic efforts be adequate to support such growth? What does the proposed budget do to back those efforts?

• Will the level of service delivery or financial condition resulting from this budget encourage or discourage donors and grantors in providing the level of gifts anticipated in the budget and plan?

Start building your management tool kit with these questions. If you already have a tool kit, continually add to it. Have something we missed? Let us know at info@proctorconsulting.org.

Allen J. Proctor was chief financial officer of Harvard University and is the author of “Linking Mission to Money Finance for Nonprofit Board Members.”  www.proctorconsulting.org

Copyright 2006. Reprinted with permission, Business First of Columbus Inc.